North Carolina Gov. Pat McCrory is proposing a plan to hold down the spiraling costs of health care for the elderly and disabled in the current Medicaid system.

The Medicaid program spends about $13 billion in state and federal funds a year to provide health coverage for more than 1.5 million North Carolina residents - most of them poor children, older adults and the disabled.

McCrory last month ordered state government offices to trim costs to help keep the budget balanced because he said the state Medicaid program was expected to spend at least $200 million more than projected.

Wednesday, McCrory unveiled a reform plan called "A Partnership for a Healthy North Carolina." He pledged his administration will cut costs and make the system more financially predictable - but will also deliver better health care with better outcomes. To do that, McCrory said he wants to end the current system that treats physical ailments, mental health, and substance abuse separately.

He said the reforms he's proposing will provide the right care and the right place at the right time.

"This administration is not going to forget about North Carolina's most vulnerable citizens," said McCrory.

The governor's administration said the reform announcement comes eight weeks after the Department of Health and Human Services invited Medicaid stakeholders to send in their input. It said more than 160 providers, recipients and advocacy groups responded.

The governor said the current system is not structured to serve the needs of Medicaid recipients, is spending too much money doing it, and is not focused on results.

Department of Health and Human Services Secretary Aldona Wos explained that the proposed reforms will create "Comprehensive Care Entities" that will be the entry point for Medicaid recipients to get the care they need.

The CCEs will have the power to assess patients to determine the best treatment and create a network of health care providers.

Wos said the CCEs will be picked through a competitive process and the entire Medicaid system will be streamlined into one IT system for management and one financial system for reimbursement.

Wos said the goal is to create a Medicaid system that is sustainable and financially predictable to make it easier to budget.

The secretary said the proposal will allow the health care industry - through its own innovations - to create cost savings while at the same time providing better care overall.

To read the full "Partnership for a Healthy North Carolina" Medicaid reform proposal, please click here (.pdf).